Financial regulation in Ireland "requires further strengthening", especially when it comes to pursuing individuals, the Central Bank of Ireland will tell a Dáil committee on Tuesday.
The statement comes in the wake of a scandal relating to a bond deal undertaken by 16 executives at stockbroker Davy, which led to an investigation and €4.1 million fine by the bank.
The Oireachtas finance committee will hear from the bank that it uncovered "serious regulatory breaches" and "aggravating factors" during the investigation, including a "lack of candour".
In their opening statement, two senior bank officials say that notwithstanding its “strong suite of existing enforcement powers”, it believes that “the regulatory framework requires further strengthening with regard to individual accountability”.
The officials will also describe how the reprimand and fine imposed on Davy “reflects the serious regulatory breaches and aggravating factors in the investigation, including the firm’s lack of candour when first reporting the matter to the Central Bank”.
Derville Rowland, director general of financial conduct with the bank, will address the committee on Tuesday alongside Ed Sibley, the deputy governor for prudential regulation. "Davy prioritised facilitating an opportunity for a consortium of 16 employees to make personal financial gain over ensuring that it was complying with its regulatory obligations," Ms Rowland will say.
Conduct standards
The officials will outline how an “individual accountability framework” which would introduce conduct standards for individuals and a new Senior Executive Accountability Regime (Sear) are “necessary enhancements to our supervisory and enforcement tool kit to support effective culture in regulated firms”.
The Department of Finance has been working on legislation to give effect to a new Sear, as requested by the bank, since 2019. Ms Rowland will say the Davy transaction "highlighted a weak internal control framework in relation to conflicts of interest management and personal account dealing".
The committee will hear that bank policy is to publish detailed statements on enforcement actions. “We do this because we believe sunlight is the best disinfectant. Publicised enforcement outcomes send a wider message to firms and individuals to drive improvements in compliance, behaviours and culture across the financial system.”
The bank has to date concluded 141 enforcement actions, resulting in monetary penalties of more than €128 million.
